Mortgage providers have begun raising interest rates to levels not seen since the financial crisis as economists warned that growing borrowing costs would trigger a steep fall in house prices.
HSBC and Santander suspended new mortgage deals yesterday. Nationwide became the first big lender to increase fixed-rate deals, with its two-year rate rising to 5.59 per cent. Three months ago it offered a comparable mortgage at 2.54 per cent.
The increase is equivalent to a family with a £500,000 mortgage spending an extra £881 a month on repayments.
Other lenders are expected to follow suit amid predictions that the Bank of England could raise the base rate as high as 6 per cent next year. Mortgage brokers said some higher loan-to-value deals could be pulled entirely because of concerns about affordability and the stability of the property market.
Huw Pill, chief economist at the Bank of England, said there would … Read more